The evolutionary origins of legume root nodules are largely unknown. We have identified a gene, LATD, of the model legume Medicago truncatula, that is required for both nodule and root development, suggesting that these two developmental processes may share a common evolutionary origin. The latd mutant plants initiate nodule formation but do not complete it, resulting in immature, non-nitrogen-fixing nodules. Similarly, lateral roots initiate, but remain short stumps. The primary root, which initially appears to be wild type, gradually ceases growth and forms an abnormal tip that resembles that of the mutant lateral roots. Infection by the rhizobial partner, Sinorhizobium meliloti, can occur, although infection is rarely completed. Once inside latd mutant nodules, S. meliloti fails to express rhizobial genes associated with the developmental transition from free-living bacterium to endosymbiont, such as bacA and nex38. The infecting rhizobia also fail to express nifH and fix nitrogen. Thus, both plant and bacterial development are blocked in latd mutant roots. Based on the latd mutant phenotype, we propose that the wild-type function of the LATD gene is to maintain root meristems. The strong requirement of both nodules and lateral roots for wild-type LATD gene function supports lateral roots as a possible evolutionary origin for legume nodules.